Human Capital, Infrastructure, and Stability: Drivers of Employment in Pakistan amid Structural Shifts

This study investigates the major factors affecting the level of employment rates in Pakistan by considering the role of human capital formation, infrastructure development, inflation rate, remittances and political stability applying the most sophisticated methodology of econometric. Applying annual time series data from 2000-2023, employing Structural Break Analysis through Robust Least Squares Regression (RLS), the study identifies significant inflection points in employment patterns of Pakistan and also estimates the relative extent of contributions of explanatory variables. The structural break analysis reveals key regime changes especially in after 2015 from CPEC investment and during COVID-19, reflecting how external shocks and policy actions alter the pattern of employment. The results defy common wisdom and show that institutional vectors – such as political stability, in case of Pakistan – may be more important than conventional economic determinants to promote job creation. By combining economic and governance factors, this study offers a unique construct for emerging economies in that they need to develop integrated employment policies that focus on multiple fronts since as long as job creation is concerned, it will not stand independent.